The Parramatta Eels are being sued for $ 1 million in a case closely tied to the NRL club’s salary cap scandal.
The ghosts of the Parramatta Eels’ salary cap scandal have reared again with the NRL club being sued for more than $ 1 million by a company entangled in the saga.
The liquidators of IT company Blackcitrus Pty Ltd have begun proceedings in the NSW Supreme Court against the club over what it claims are unpaid invoices.
The company signed a heads of agreement with the Eels and then CEO Scott Seward in February 2015.
However, the Eels claim the contract was a “sham”, “illegal” and “void” because it was an attempt to circumvent the NRL’s third party agreement rules.
The Parramatta Eels were in 2016 hit by the NRL with a $ 1 million fine and had 12 competition points stripped after an investigation found they had breached the salary cap by circumventing third party agreement rules.
Five officials – chairman Steve Sharp, CEO John Boulous, deputy chairman Tom Issa, director Peter Serrao and football Manager Daniel Anderson – were also deregistered.
Third party agreements are contacts between players and companies that do not count towards their club’s salary cap.
However, the game’s rules state they must be struck at arm’s length from the club.
Liquidators were appointed to Blackcitrus in October 2018 and began Supreme Court proceedings against the Eels in July last year seeking $ 1.17m, including $ 568,000 in unpaid interest.
The company and its CEO Stephen Moss inked a contract with the Eels and Mr Seward for the provision of IT services including a “player management platform” and “premiership club” system.
Mr Seward resigned in July 2015, just 22 months in the job.
According to the liquidators, Blackcitrus had a four-year deal worth $ 221,000 a year.
They say the company was paid $ 404,000 between February 2015 and July 2016 but the rest of the money was unpaid.
In February 2015 one of Blackcitrus’ subsidiaries, Scorecube Pty Ltd, entered into a third-party agreement with Eels back-rower Anthony Watmough.
The court heard that Blackcitrus also had an agreement with former fullback Jarryd Hayne.
The Scorecube agreement was one of the third party agreements cited by then NRL CEO Todd Greenberg when he handed down record penalties against the Eels.
The NRL’s salary cap investigation found no wrongdoing on the part of the company, Mr Watmough or Mr Hayne.
The liquidators have claimed that despite demands for payment being made they are still owed $ 1.17m.
However, the club says the contract was a “sham” and shouldn’t be honored because it was struck in an attempt to funnel money to players in contravention of NRL rules.
They claimed it was an attempt by the former Eels staff to avoid compliance with the NRL’s rules and code of conduct.
The club’s defense relies on findings by the NSW Independent Liquor & Gaming Authority which banned four former directors – Steven Sharp, Toufic Issa, Geoff Gerard and Peter Serrao – from holding management roles with registered clubs for three years.
The regulator found the four directors were not fit and proper because of their failure to disclose suspected salary cap breaches.
The authority’s claim was brought against the directors in their roles on the Parramatta Leagues Club board.
However, at the time the Leagues Club board was a mirror of the Parramatta NRL club board, with the same directors sitting on both.
The liquidator’s barrister Andrew Smith appeared in the Supreme Court on Thursday where he argued sections of Parramatta’s defense should be struck out.
“We say the fact the defendant may have, by entering into the agreement, sustained professional and reputational damage doesn’t constitute illegality,” Mr Smith said.
The hearing before Justice Stephen Campbell continues.